LOS ANGELES – The automotive blockchain is very promising, but experts warn car manufacturers and suppliers to apply it surgically and only where they can add value to their businesses.
"People want to apply blockchain to everything, but we have to make some decisions about their application," says Naghmana Majed, leader-Automotive and A & D Solutions, at IBM.
"What is the business model? There is a clear business value, especially in the field of new revenue opportunities? Technology for technology does not do anything for anyone," he told a group of AutoMobility LA on blockchain technology in the automotive industry.
The blockchain is a data tree, or distributed ledger, managed by a peer-to-peer network. Once the data has been re-encoded on the blockchain, it can not be changed without a network consent. The changes can be monitored and verified, which is good for automotive applications such as insurance and registration, supply chain management, finance and fleet management.
An example: a pilot program to trace the cobalt, extracted from craft sources in the Democratic Republic of the Congo and intended for use in lithium-ion batteries of electrified vehicles, will use the blockchain to ensure that it is mined responsibly.
Because the data on the blockchain are decentralized, they are also considered to be a more reliable document and less susceptible to hacking.
The blockchain has been launched to public consciousness with the cryptocurrency Bitcoin, a decentralized digital currency that relies on the distributed register of technology to track and verify transactions. Investors have gathered on the promise of Bitcoin and smaller cryptocurrencies, bringing their share prices to the moon.
But questions about the future of cryptocurrencies have emerged and skepticism has spilled over into other sectors, including the automotive sector, where its application would not be based on currency but as a shared and encrypted database.
Rahul Sonnad, co-founder and CEO of Tesloop, which runs a car-sharing platform for efficient data exchange and cryptocial interactions based on blockchain, calls into question a fundamental principle of technology, trust in traditional businesses.
"Trust is not a problem", offers. "Companies trust one another for thousands of years".
In automotive applications, blockchain also deals with latency problems, a major technical obstacle to its implementation. It simply does not work as quickly as current methods to help dealers keep track of used car stocks, for example.
But with 250 million connected cars expected to wander the streets of the world by 2020 and the 20 million connected devices worldwide double every few years, there could be an important role for blockchain in protecting transactions and even push the updates over the air to the suppliers of car manufacturers.
Chris Ballinger, CEO and co-founder of MOBI, a software to centralize, understand and control mobility programs by integrating with other stakeholders such as wireless operators and corporate IT systems, previously worked in finance at Toyota and states that the blockchain may have transactions reconciled efficiently between the carmaker and various partners.
He says that the common standards for the application of blockchain in the automotive sector would do much to eliminate latency, in addition to the currently high costs of its implementation.
"This would change things by an order of magnitude," he says.
Rick Gruenhagen, Spireon's chief technical officer, a GPS tracker and cloud-based fleet manager, says the blockchain promise will only be realized when the industry acquires.
"If it must work, everyone must embrace it," he says.